FG Earned N1.662trn From Oil Block License Renewals, Royalties In One Year

Oil Well – For illustration purpose

Minister of State for Petroleum Resources Ibe Kachikwu says the Federal Government, through automation initiatives by the Department of Petroleum Resources (DPR), has realized over N1.66 trillion from royalties and renewal of oil block licenses within one year; about 80 per cent rise against the previous year’s.

Speaking in Lagos, yesterday, during the launch of Crude oil and Liquefied Natural Gas (LNG) Tracking (COLT) and automation initiatives, Kachikwu said until now, the process of royalties payment was determined by the oil firms, adding that today, the process is being determined by the DPR through automation initiatives.

The breakdown, according to the minister shows that a total of N1.3 trillion was realised from royalties while $1.2 billion was earned from 42 oil blocks renewals.

“This is part of President Muhammadu Buhari’s mandate to improve earnings in the nation’s oil and gas sector as well as strengthening regulations to enhance efficiency in the daily crude oil production and exploration.

The minister noted that the country now has a computer based application that enables the regulatory agency to track crude oil, petroleum products from different terminals to their destinations both within and outside the country.

“It is a vessel tracking mechanism so that at any given time, we can tell what the country has produced for the very first time in the history of the country. We can also tell where the products have gone in term of export and where they are discharged.

The new technology monitors on a forensic basis, if there are some suspicious movements of vessels after we have products loaded into them.

“It has also been extended to the downstream sector to be able to capture everything that is brought into the country in terms of product importation of refined products. And also to be able to track the distribution,” he said

He noted that the regulatory agency has also launched a benchmarking system to track the expenses and reduce cost of producing oil in the country which, according to him, had been a major challenge.

“The benchmark system will help cut down cost of producing crude oil in the country and given the oxalating price oil all over the world, unless we are able to do this, we will produce all the oil and we will make no money out of it.

“The new scheme has been very helpful. With this we can challenge the oil companies with what they have externally in terms of best practice”, he said.

Kachikwu explained that henceforth, oil companies must ensure that they don’t have royalty arrears for payment before renewal of their licenses, adding that no oil company’s license will be renewed with royalty debts.

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